Do I need to be pre-approved to do a contingency offer IF it is not necessary for me to finance after my home sells? That is we're downsizing...Selling our home for 850 in an upscale neighborhood with good sales history all around us and making a contingency offer on a home for $400K... Our past debt would be wiped out and we would owe zero on the new home...

Yes, you definately need to pre-approved for a mortgage in order to put in an offer on any property. You really should do that before you look at properites. Otherwise, you could be looking at the wrong price-range - either setting your sights on homes you can't afford or else missing out on others because you think you can't afford them - both situations will be frustrating and unproductive for you.

Yes, you may even be required by the seller to show a pre approval (instead of a pre qual) It is good for you to know what you can afford as well. A pre approval from a bank does not tie you to that bank if that's what you are worried about. You can shop around for a better rate after you go under agreement on a house but you will need to meet the commitment date in your contingency (or risk losing a lot of money) so you won't want to shop around for too long..

Do you go out to lunch without knowing how you will pay for it? Will the house you want to buy cost more than lunch? Forget the sellerâ€™s side, why would you go to so much trouble without establishing your position? I do not understand why buyers write offers without being fully credit approved in advance but I see it happen a lot. A tiny, single issue with your financing could cost as much money as you have saved over the last 5 years. I hope my comments keep you out of trouble, good luck,

You have already received some great advice here. There are a couple of things I would like to add....

As the real estate market in Massachusetts has remained somewhat strong compared to other areas of the country, you could find yourself in a competitive situation when you find the perfect home.

Having a preapproval letter in hand when you write the offer not only lets YOU know that a bank has given you an idea of your buying power but sends a direct message to the seller that you have been prescreened and WILL be able to obtain financing.

I have closed several deals where multi-offer situations came down to the preapproval letter...AND the name of the company on the letterhead!

Do yourself a huge favor and speak to a reputable (preferably local) lender (not an unknown you find online!) One other advantage of this is the lender will be able to discuss any special financing programs that you might qualify for. You will also get a sense of what your monthly payments would be as taxes and insurance can vary tremendously by town here in MA.

Technically you don't have to be prequalified to make an offer. But I have never heard of a seller accepting an offer without at least a prequlaificiation.. In MA we usually ask for a pre-approval, which means the lender has actually checked credit and looked at the buyers finances.

Contingencies are unrelated to the prequal. The seller will decide those based on the strength of the offer and how limiting they are. Normal contingencies are inspections and loan commitment. A home sale is less likely to fly, but you might be able to get a "right of first refusal".

Yes (or pre-approval is better as Mark explained) otherwise your offer is not valid. For an offer to be valid you have to demonstrate that you are a ready, willing and able buyer...without being prequalified or preapproved then you lack the "able" part.

Also, if there is another offer up against yours or if one comes in while the sellers are waiting for your contingency to be met - you could lose it.

Most likely the answer is yes. You almost always have to be prequalified. This saves the seller from waisting time on people who are not qualified but feel they are qualified. A prequalification is easy and takes abou ten minutes to do. A pre approval takes more time and energy but has more weight.